Incentives: How Detroit Kept Selling Cars in Snowy February

Are consumers paying more for their newest vehicles? The latest data suggests pricing, like the industry’s new auto sales for February, is a bit choppy.

February is notable for two high profile auto-industry events: the Super Bowl, when a number of auto makers unveil high-profile advertising campaigns, and Presidents’ Day weekend, the first big holiday shopping weekend of the year for new car shoppers. That weekend accounts for about 12% of all February car sales, according to online automotive-information provider Edmunds.com.

Observers TrueCar and Kelley Blue Book each reported that February transaction prices are higher than a year ago, though incentives to entice consumers to complete a deal appear to be keeping a lid on the prices shoppers are paying.

TrueCar, for example, estimates the average transaction price for light vehicles in the U.S. was $32,074 in February, up $1,110 from last year. That is the highest level for February in the past five years, TrueCar said. But incentive spending also picked up, jumping 5.1% to $2,633 on average. Nearly all major auto makers tracked by TrueCar spent more on incentives, which can come in the form of cash, low financing and special lease programs.

Part of the reason incentives are high, according to some observers, can be attributed to bloated inventory. Inventories for General Motors Co. and Fiat Chrysler Automobiles were very high in January, and remained lofty last month. Incentives can help move units off a dealer’s lot.

Interestingly, Fiat Chrysler commanded higher transaction prices this February and spent less on incentives, according to TrueCar and Kelley Blue Book data. But the auto maker was one of the strongest performers for the month, with overall sales up 11%.

TrueCar said incentives for Fiat Chrysler’s Jeep and Ram brands slid 9.8% and 19%, respectively, in February. But Jeep sales soared 47%, bolstered by the new Cherokee and higher demand for the Grand Cherokee and Compass. Ram sales were up 28%.

Incentive spending sharply climbed at Honda Motor Co. and Hyundai Motor Co.—though it remains to be seen if their sales will benefit. Both are expected to report their monthly sales later Monday.